In this paper, we identify the basis of leader-member exchange (LMX) differentiation as a crucial factor influencing the relationship between LMX differentiation and work group outcomes. Drawing from the relational theories of procedural justice, we theorize members' task performance and organizational citizenship behavior (OCB) as the two main bases of LMX differentiation. We hypothesize that LMX differentiation will be less negatively related to intragroup relational quality and group proactivity when there is more task performance-based and/or OCB-based LMX differentiation within the group. Data from two field studies provide consistent evidence for the moderating effects of these two bases of LMX differentiation. In addition, the results of Study 2 show that the task performance-based LMX differentiation moderates the cross-level relationship between LMX differentiation and members' procedural justice perceptions. At the group level, the procedural justice climate mediates the interactive effects of LMX differentiation and task performance-based LMX differentiation on group proactivity but not on intragroup relational quality. We discuss the theoretical and empirical implications of these findings in the organizational context.

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We examine subsidiary survival from an intersubsidiary competition perspective. Drawing from 87 Taiwanese subsidiaries of MNEs we examine the influences of strategic importance of a subsidiary, resource asymmetry, and characteristics of value activities on the survival rate of a subsidiary. Results show that these factors have differential effects on the survival rates of a firm's foreign subsidiaries. Specifically, strategic importance and gains in intangible resources enhance a subsidiary's survival rate, whereas local responsiveness, gains in physical resources, and similarity and mobility of value‐added activities decrease its survival rate. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.

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